Netflix and other SVODs are losing subscribers to ‘involuntary cancellation,’ study says

Apple TV room
Of course, a sizable portion of consumers who drop SVOD services are doing so with intent. (Pixabay)

Customer cancellation and churn is a fact of doing business for SVODs like Netflix, but a new study suggests that many subscribers aren’t leaving SVODs on purpose.

“Involuntary cancellation” is a serious problem for SVODs operating in the U.S. and the U.K., according to a recent study by Amdocs-owned Vindicia and commissioned from analyst firm nScreenMedia. The “involuntary” nature of these cancellations is typically due to payment failures that occur due to credit card problems like insufficient funds. The study said that more than a quarter of U.S. and a third of U.K. online video streamers have had an SVOD service cancelled due to a credit card problem and, of those groups, 30% did not return to the service.

Colin Dixon, founder and chief analyst at nScreenMedia, said that young adults from 18 to 34 years old are twice as likely to have experienced involuntary cancellation in the U.K., and three times more likely in the U.S.

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“For video streaming services, the ability to acquire and retain subscribers is vital to their success,” said Anthony Goonetilleke, group president of Media, Network and Technology at Amdocs, in a statement. “However, streaming services are losing subscribers—and millions of dollars in annual revenue—due to involuntary credit card cancellations. This kind of customer churn is largely preventable. By leveraging the right intelligent technology, video streaming providers can recover failed payment transactions and capture revenue that would otherwise be lost, enabling them to better compete in a highly competitive market.”

RELATED: Netflix added 1.5M U.S. subscribers during Q4

Of course, a sizable portion of consumers who drop SVOD services are doing so with intent. According to the study, Netflix users are slightly less likely than average to have cancelled service in the last year; Hulu users are slightly more likely. And Amazon Prime Video users are no more or less likely than on average.

The biggest reasons consumers cited for cancelling service are not being able to find enough content they liked and feeling that the service didn’t provide enough value for their money. But the study suggests that the odds of luring those subscribers back are good. Approximately 33% of U.S. and 25% of U.K. customers who cancelled said they have been persuaded to sign up for service again.

Overall, the study found that 70% of households in the U.S. and 40% of U.K. homes have a subscription to at least one streaming video service, and that the average subscriber in the U.S. watches 3.4 services and pays an average of $8.53 per service.

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